“Do I need rental car insurance?” How you deal with this single question could double the cost of your car rental, says Bottom Line’s consumer expert Christopher Elliott. Reason: The insurance coverage sold by car-rental companies is dramatically overpriced. These companies often make more money selling insurance than they do renting vehicles. What’s more, you almost certainly don’t need the coverage that the rental company is peddling.
But: You do need some form of coverage, because driving without insurance is a massive financial risk and potentially illegal. Key: Confirm what insurance coverage you already have, and/or arrange for coverage from another provider before reaching the car-rental counter. Below are questions worth considering…
Most auto insurance policies do cover domestic rentals. But there are exceptions, so read your policy and/or call your insurer for confirmation. Also consider whether the coverage provided by your policy is sufficient for a rental car. Example: If you own an older car of limited value, you might have only liability coverage on it, not comprehensive or collision. Liability covers damage done to other drivers and their vehicles in multicar accidents—but it does not cover damage to the rented vehicle that the policyholder is driving. If you only have liability coverage and you total a rental car, you could end up paying out of pocket to buy the rental agency a new car.
Potential limitations: Certain types of rental vehicles, such as luxury cars, cargo vans, trucks and RVs, often are not covered by personal auto insurance policies…and many US auto insurance policies don’t provide coverage outside the US and perhaps Canada.
If you have numerous credit cards in your wallet, it is likely that at least one offers rental-car insurance. Use this card to rent cars even if you have other cards that offer more cash back or rewards points. Contact your card issuers or visit their websites to determine which of your cards offer rental-car coverage and learn about the rules and limits that apply. Credit card rental-car coverage typically doesn’t include liability coverage, so if you cause a multicar accident, it probably won’t help pay for damage done to the other cars or injuries to other drivers. The coverage provided by credit cards usually is “secondary,” which means that if you also have an auto insurance policy, your own policy will pay out first and the credit card coverage potentially will fill in certain coverage gaps. Example: A credit card might provide collision coverage if your auto insurance policy covers only liability.
Potential limitations: There’s usually a cap on the length of rentals covered—often 14, 15 or 31 days. Coverage might not be provided in every country—Ireland and Jamaica are among the countries most often excluded. Credit card coverage often doesn’t include “car sharing” rentals, such as Turo.
Almost certainly yes. If your auto insurance policy and credit cards together don’t provide a level of coverage that makes you feel comfortable, companies including Allianz, Bonzah and Sure offer coverage for around half the price charged by rental companies.
Coverage offered by rental-car companies can cut down on hassles. If your rental car is damaged, relying on the coverage described above could leave you in the frustrating position of coordinating between the rental company and the coverage provider. Opting for rental-company coverage also reduces the odds that you’ll be saddled with fees that the insurance company refuses to pay, such as “loss of use” fees for the days the vehicle can’t be rented out because it’s in the shop.
Reminder: Take photos of every part of the rental car—including every section of its interior, exterior, underbody and roof—before driving the car off the rental lot and again after returning it to the lot. These photos can be used to refute false rental-company claims that you damaged the vehicle or left it messy. Never accept a rental car that has any damage, even if a rental-company employee promises that this damage has been noted and you won’t be held responsible for it.
